The defence and aviation industry is currently redefining the Indian economy. Despite the consistent raise in defence budget allocation over the past two years, the total budgetary allocation remains between 1.97 per cent and 2.41 per cent of the GDP; much less compared to India’s neighbours. Even though the allocated budget appears to be very high, there is a chance that the funds may not be suffice to meet the long-term modernisation programme.

The defence budget needs to be raised again, keeping the focus on capital expenditure. It is also essential since the attached offset obligations will also act as a catalyst in the growth of the indigenous industry.

Granting status: Given the ailing state of the aviation industry, it will be of great help to grant Declared Goods status to ATF even though a complete financial bail-out for the airlines may not be possible.

The aviation industry has long been bogged down by a negative fiscal regime and heavy taxes with strangulating cost structures. Measures to cut these costs need to be on the list of priorities in the upcoming Budget. While the common man remains at the centre of the offerings of the Union Budget, it also needs to address the needs of the two industries that may well mean a turn-around for the Indian economy.

Puneet Kaura, Executive Director, Samtel Display Systems

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